Australian independent Santos said today it is holding price review discussions for some of its LNG contracts.
Any price changes would be limited by the terms of the existing contracts, chief executive Kevin Gallagher said.
The company did not say which LNG contracts are under review. Santos sells 95pc of its LNG volumes under long- and medium-term contracts and has minimal exposure to the market, Gallagher said.
Santos has stakes in three LNG projects, which have contracts with at least nine companies.
The firm's 7.8mn t/yr Gladstone LNG (GLNG) venture in Queensland, which it operates with a 30pc interest, has contracts with South Korea's Kogas and Malaysia's Petronas. Santos has an 11.5pc interest in the 3.7mn t/yr Darwin LNG venture, which has contracts with Japan's Jera and Tokyo Gas. It also has a 13.5pc stake in the 6.9mn t/yr PNG LNG project in Papua New Guinea, which has contracts with Japan's Osaka Gas and Jera, China's PetroChina and CNOOC, Taiwan's CPC, and BP.
GLNG is on track to reach a production rate of 6mn t/yr by the end of this year, supported by a rise in development well drilling. There were 189 wells drilled at GLNG in the first half of 2019, with plans to drill 350-400 wells this year, up from 305 wells in 2018.
"At GLNG, our development plan is to unlock more gas over time," Gallagher said. GLNG ullage capacity of 8.4mn t/yr provides opportunity for organic and inorganic growth.
Santos and its partners in the Barossa field offshore Australia's Northern Territory have started exclusive talks with the owners of Darwin LNG — both of which have the same shareholders — about the supply of backfill gas to replace gas supplies from the Bayu Undan field in the Timor Sea.
"We expect Bayu Undan to reach end-of-field production in 2022 and we see the start-up of Barossa in 2024, but we have not said how long exactly the Darwin plant will be off line while we move between fields as this time estimate is a moving target," Gallagher said.
Santos is in advanced discussions LNG buyers on firm offers for Barossa offtake volumes. "We expected to contract a significant proportion of our Barossa equity gas by the time we reach FID (final investment decision) that we plan to do in the new year," he said.
